The future bet originated in 1864 on the Chicago Board of Trade. Originally they were used by farmers to hedge their agricultural production. Today you can find futures on nearly everything, including who wins the BCS Title.
I touched on this topic in my Georgia future bet post as well as in the comment section with some very knowledgeable readers contributing too, and thought that it deserved an actual post since I’ve been thinking a lot about it. When analyzing a future bet, as Trentmoney expressed, it needs to meet certain categories. I think a lot of people weight some things too much, and other things not enough when analyzing a future bet.
In the hedge fund and private equity realm of finance, we use a term called “seeking alpha.” Alpha is the return that you can get outside of non-market returns. This ultimately becomes the strength of a fund manager.
In betting, this alpha comes from the strength of the capper. Everyone sees things differently, so half the battle in my eyes of capping, is sifting through the dust, and finding out what matters and what does not. Find a few things that you see as game changers (QB vs. Secondary, Coach vs. Coach, Motivation, etc.) and let those help to compile your side and ultimately your play.
Alpha is especially important with sports futures. You have odds that you will sit with for the length of your investment (the season). You have to find the alpha, or value, in the odds to bite on them. I spoke about this in my Georgia post and in the comments. Where do you find your bang for your buck? How much risk do you want to give to achieve the reward?
First, you obviously have to ask “do they have a valid chance of MAKING the BCS Championship?” Making is the key word here. We all know how royally jacked up the BCS is (at least until the playoffs start, and then we’ll find more problems). Once the team makes the Championship, hedging automatically locks you in with profit.
You need to be able to realistically see a team making its way into the BCS Title game. This involves analyzing the schedule, returning players, and something many overlook, other teams that start out the season ranked ahead of them in the polls. To make the title game, you roughly have to be Top 3 in the polls at the end of the season.
First, is by being the best team in the SEC, which is most likely the SEC Champion. The SEC is regarded as the best conference in college football and quite frankly across the board, it is. That is slightly bias, but top to bottom it is the best; no questions asked. There are some other VERY good conferences out there that typically have 2-3 good teams, but their doormats typically can’t compete with the SEC doormats.
With that being said, the winner of the SEC generically is regarded as one of the best teams in college football, and makes it to the championship. If you have an undefeated SEC team and no other undefeated team in the country, it could be two SEC teams (like last year) playing for the crystal. So picking the winner of the SEC generally gives you some solid odds in a future bet.
After the SEC, you have to look at the other conferences. My opinion here is that the other team, to beat out the SEC, has to be undefeated. This may be the first year that two non-SEC teams could make the National Championship in a very long time. I think USC and Oklahoma both could run the table. I think there is enough parity in the SEC this year that every team could walk away with one loss, and with two other teams from solid conferences being undefeated would block the SEC from this game.
To analyze this key to the future bet, the first thing to look at is the team.
Coaching. Don’t overlook this. How successful has a coach been with attracting new talent, developing that talent, and implementing that talent? Can they take a 3-star recruit and make him a contributor? Can they fill the gaps in the team that graduated the year before? Will the coach be wasted on a motorcycle with his mistress and get fired mid-season? All of these things have multitudes of possibilities.
Returning Players. Who took the summer off? Who has a talented QB leader and a good returning defense? What QB and WR spent the summers training and running routes together? How well will a player recover from ACL surgery? What player will pull a Garcia? Yes, I created this term in memory of Stephen Garcia, the SC QB that just loved boozing and fighting frat bro’s too much. Can you blame him? Some of these things you can figure out, some you just have to make educated guesses on.
Schedule. How do they get to the title game? Can they go undefeated? Where are the upset spots? Can you see them prevailing?
The Odds. To make a play on a future bet, you have to have enough odds to place the bet, as well as hedge it appropriately if necessary. In some instances, you can even hedge a team in a conference championship if you already have a good guess they won’t win or you know the other teams that will be playing in the game already.
It all comes down to alpha. Do you have enough of a payoff to lay the money with so much unknown?
Honestly, I’m not a huge fan of the future bet, and as the season goes on, you will hear me preach about managing your bankroll early in the regular season, and early in the bowl games. I usually wait till week 3 to start upping my unit plays. That is because I like to analyze the things I just mentioned above, which cannot be done until you see a team play. I’ve heard so so so many times of cappers that have hit over 50%, and generally do a good job of picking sides, that end up with losing seasons somehow. The answer is because of how they manage their bankroll.
Think about it this way, if you LOVE facebook stock (haha!), and only like Apple (This is a ridiculous example obviously, and I am not trying to give you financial advise nor guiding your investments) would you put an equal amount in FB and AAPL? Absolutely not.
In football terms, if you really believe ‘Bama is going to cover against Michigan and 4 out of the 5 key game changers (as discussed above) are in your favor, but on the contrary, only 2 game changers in the USC vs. Hawaii game are, what game are you putting more money on? It sounds so obvious, but so many people overlook this aspect.
Everyone has their own methods. The S&P is up 12.7% YTD. That is a great return in a portfolio that any investor would love to have. If you want good returns, you will traditionally follow my methods more of allocating differently to different plays. Win more money on your big games, lose less on your small games.
If you want to have the huge swings that put most gamblers in rehab, bet a shit ton of money on every game and hope you hit more than you don’t. There’s no perfect science, but there is a science to generating positive returns.
Let me know your thoughts. For quick response, tweet me @mtsabert